Analyst: Amazon Unlikely to Provide ‘Strategy Road Map’

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The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.  

Amazon (NASDAQ:AMZN) will report first-quarter results after the close on Thursday and host a call to discuss results at 2 p.m. Pacific Time (webcast: www.amazon.com/ir).

We expect Amazon to report Q1 revenue in line with our above-consensus estimates as it continues to gain share from brick-and-mortar retailers; EPS remains unpredictable as the company’s spending soaks up gross profit dollar growth. Our estimates are for revenue of $19.52 billion and EPS of 17 cents, versus consensus of $19.44 billion and 24 cents, and guidance for revenue of $18.2 billion-$19.9 billion. We modeled operating income of $156 million versus guidance of $200 million, but our estimate may prove optimistic, as Amazon has consistently sacrificed near-term profitability in order to drive long-term growth.

In March, Amazon announced a price increase for Prime membership to $99 annually. The $20 increase was at the low end of the $20-$40 increase Amazon suggested during its Q4:13 conference call. The company did not specifically provide a reason for the increase when discussing it with investors earlier this year. We believe the price increase is intended to offset rising fuel costs and additional spending on streaming content commitments, among other items.

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